Complete the following by calculating the cash discount and net amount paid: (If more than one discount, assume date of last discount.) Gross amount of invoice (freight charge already included) $ 600 Freight charge None Date of invoice 8/12 Terms of invoice 2/10, 1/15, n/30 Date of payment 8/24 Cash discount Net amount paid

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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### Calculating Cash Discounts and Net Amount Paid

Complete the following by calculating the cash discount and net amount paid. (If more than one discount, assume date of last discount.)

| Gross amount of invoice (freight charge already included) | Freight charge | Date of invoice | Terms of invoice | Date of payment | Cash discount | Net amount paid |
|-----------------------------------------------------------|----------------|-----------------|------------------|-----------------|---------------|-----------------|
| $600                                                      | None           | 8/12            | 2/10, 1/15, n/30 | 8/24            |               |                 |

#### Explanation

- **Gross Amount of Invoice**: The total invoice amount, including any freight charges.
- **Freight Charge**: Any additional transportation cost associated with the delivery.
- **Date of Invoice**: The date when the invoice was issued.
- **Terms of Invoice**: Describes the discount available if the payment is made within a specific period. For example, "2/10" indicates a 2% discount if paid within 10 days.
- **Date of Payment**: The actual date when the payment was made.
- **Cash Discount**: The amount reduced from the gross invoice amount if conditions are met.
- **Net Amount Paid**: The total amount paid after accounting for any cash discount.

Given the terms "2/10, 1/15, n/30", payment made on 8/24 qualifies for a 1% discount since it is within 15 days of the invoice date (8/12). The calculation needs to be conducted accordingly to find the cash discount and the net amount paid.
Transcribed Image Text:### Calculating Cash Discounts and Net Amount Paid Complete the following by calculating the cash discount and net amount paid. (If more than one discount, assume date of last discount.) | Gross amount of invoice (freight charge already included) | Freight charge | Date of invoice | Terms of invoice | Date of payment | Cash discount | Net amount paid | |-----------------------------------------------------------|----------------|-----------------|------------------|-----------------|---------------|-----------------| | $600 | None | 8/12 | 2/10, 1/15, n/30 | 8/24 | | | #### Explanation - **Gross Amount of Invoice**: The total invoice amount, including any freight charges. - **Freight Charge**: Any additional transportation cost associated with the delivery. - **Date of Invoice**: The date when the invoice was issued. - **Terms of Invoice**: Describes the discount available if the payment is made within a specific period. For example, "2/10" indicates a 2% discount if paid within 10 days. - **Date of Payment**: The actual date when the payment was made. - **Cash Discount**: The amount reduced from the gross invoice amount if conditions are met. - **Net Amount Paid**: The total amount paid after accounting for any cash discount. Given the terms "2/10, 1/15, n/30", payment made on 8/24 qualifies for a 1% discount since it is within 15 days of the invoice date (8/12). The calculation needs to be conducted accordingly to find the cash discount and the net amount paid.
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